Problem 6.3 Determinants of Interest Rates for Individual Securities (LG6.6) Dakota Corporation 15-year bonds have...
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Problem 6.3 Determinants of Interest Rates for Individual Securities (LG6.6) Dakota Corporation 15-year bonds have an equilbrium rate of return of 9 percent. For all securities, the inflation risk premium is 1.60 percent and the real risk-free rote is 3.20 percent. The security's liquidity risk premium is 0.70 percent and maturity risk premium is 1.30 percent. The security has no special covenants. Calculate the bond's default risk premium. (Round your answer to 2 decimal places.)
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